Boeing (BA) reported preliminary fourth quarter results on Thursday after the bell, estimating a whopping $3.5 billion operating cash flow loss due to the effects of the IAM (International Association of Machinists) work stoppage, alongside workforce reductions and changes to its defense business.
For the quarter, Boeing expects to report revenue of $15.2 billion versus $16.76 billion consensus estimates per Bloomberg on a GAAP loss per share of $5.46 versus a loss of $1.32 estimated. Boeing also expects to take pre-tax charges of $1.7 billion in its defense and space business.
Boeing shares were down 1% in after-hours trade. “Although we face near-term challenges, we took important steps to stabilize our business during the quarter including reaching an agreement with our IAM-represented teammates and conducting a successful capital raise to improve our balance sheet,” said Kelly Ortberg, Boeing president and CEO. “We also restarted 737, 767 and 777/777X production and our team remains focused on the hard work ahead to build a new future for Boeing.”
Boeing said the IAM strike, which concluded in November with a new four-year contract, will lead to higher labor costs, resulting in pre-tax charges of $1.1 billion for the 777X and 767 jet programs.
Following the eight-week strike, Boeing upped the pay of IAM members by 38% over four years; merged the prior $7,000 ratification bonus with a $5,000 lump sum payment for a total $12,000 into 401(k) plans or as a cash payout; increased its 401(K) match; and lowered health care premiums, among other things.
In early December Boeing laid off hundreds of workers at its base in Washington state and in California. The company had previously said it would reduce its headcount by 10%.
Earlier this month Boeing reported that it delivered 57 planes in the fourth quarter: 36 737 MAX jets, 15 787 Dreamliners, and three 767 and three 777 jets. For the year Boeing said it delivered 348 commercial jets, down a third compared to a year ago.
In November, Boeing’s dwindling cash position threatened the company’s investment credit rating, which led to it announcing that it would launch a $19 billion share sale to boost cash reserves. Boeing said at the end of Q4 cash and investments in marketable securities stood at $26.3 billion.
